It’s a dilemma parents agonize over: how do you ensure that your children get the best education without breaking the bank account and sacrificing your family’s current life style? It’s a tough question but one that has an answer, provided you start preparing right now. How? Well, getting started early on saving is always good but simple saving just won’t do. Here’s a few investment plans worth considering when it comes to funding your children’s education.
If you’ve read the previous sections, then you’ll know about investment-linked life plans as well as investment-linked medical plans. Similar to these plans, an investment-linked education plan offers high flexibility, allowing you to tailor the plan so that it fits both your budget and your children’s needs. You can start with a relatively low premium (as low as RM100) and then slowly build up on your investment when you have more income at your disposal. Investment-linked education plans also usually have benefits such as optional medical insurance, covering medical costs for your children right up to a certain age. Take a look at some of the key features that an investment-linked education plan would typically have:-
- Incorporates comprehensive protection and savings under one plan.
- Low entry premiums which can start from as low as RM 100 per month.
- Uses a unit trust investment vehicle to grow your money faster.
- Allows you to boost the investment value of your policy via single premium top-ups.
- Allows you to pick your own funds (these are usually unit trust funds) to suit your children’s education goals.
- Allows you to choose your own protection and investment levels in accordance with your budget.
- Option for flexibility when it comes to withdrawing a portion of your investment.
When would you choose an investment-linked education plan? It’s worth considering if you want:-
- A comprehensive education plan.
- A decreasing cost of investment as time passes.
- The flexibility to increase investment or vary your investment strategy.
- A protected education fund.
- Tax relief.
You can think of an endowment plan as similar to a whole life insurance plan, with the exception that the former is designed to maximize the amount that you can save, as opposed to providing maximum protection. Endowment plans can be better understood by looking at its key features, such as:-
- Premium payments that are guaranteed to remain the same year after year.
- Guaranteed death and disability coverage.
- Guaranteed stream of income that typically starts from the end of the first policy year onwards.
- Additional non-guaranteed cash bonuses that typically start from the end of the first policy year onwards.
- Certain plans feature a limited pay option. Under such a payment scheme, you’d typically have the option of paying premiums for either 5,10 or 20 years for a 30-year coverage term.
- Waiver and payer options which guarantee the continuity of the plan in the event something happens to you.
- Typically offers additional benefits upon maturity of the plan.
So is an endowment education plan right for you and your children’s future? You should definitely consider an endowment education plan if you want:-
- A secure education fund.
- A limited pay option.
- To diversify your portfolio of investments.
- A protected education fund.
- Tax relief.
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